Contract Intelligence Redefining Contract Management With AI

Contracts are the most complicated to skim through. They span across verticals and have functional roles across all verticals. The issue of information being inaccessible makes it even more challenging to manage them. There is a risk of losing out on business opportunities that may go unnoticed in this chaos.

When contract management is done manually, it becomes even tougher due to numerous amendments and recurring renewals. As the contracting base grew with exploding business activities, the need for a comprehensive contract management system was felt.

That’s how Contract Lifecycle Management (CLM) was conceptualized. With CLM solutions coming into play, the landscape for contract management started changing rapidly. More was expected in less time now that an automated software was in place. The markers that provided CLM solutions had to expand their horizons and offer more than just contract management. Thus, the work on contract intelligence began.

Contract intelligence and beyond

Contracts hide a lot of information. It has a lot of intelligent insights that could help businesses analyze risks, recognize cost-saving opportunities, limit liabilities, and so on and so forth. By inculcating AI with a CLM, the innovators found a breakthrough to chart out these insights and convert them into actionable items. For example, using AI, the tool could identify and decipher unstructured data into structured enterprise data.

Now AI has the capacity to generate MIS reports based on the contracts that are stored in the system. It understands the meaning of clauses and contracting language. This helps revolutionize contract management from simple document management to a fully equipped system that gives a complete overview of the contracting portfolio.

Applications of contract intelligence in contract management

With the help of advanced machine learning algorithms, it is now possible to analyze clauses and other data. It makes it easier for companies to review contracts and quickly streamline the processes required for a large amount of contract data. This in turn smooths out the negotiation process directly affecting the turnaround time for contracts.

Here are a few quick examples of applications of AI & ML in contract management.

Classification: Each contract can be classified according to its type and content. E.g. - SOW, MSA, Leave and License, Lease, Sale Purchase, Sub-contractor agreements, so on and so forth. Classifications can also be done to segregate similar types of documents for contracts.

Clause highlighting: Since the AI is now capable of understanding the language of contracts, it has become possible to identify and highlight the significance of paragraphs or clauses as and where required. AI can also highlight important information covered in these clauses for immediate attention.

Identify new clauses: If there are a lot of new documents containing new clauses, AI can learn all the new clauses and save them in its clause library for further use.

Learning and training: A supervisor can alter, edit or change any wrongly classified clauses, and the system will learn it over time and recognize the same in the future based on the edits.

How does contract intelligence work?

AI & ML has always been a complex and dynamic field that is loaded with intricacies. It gets more convoluted when it is applied to an already lively field of contracts. Let us see a few scenarios in depth. Automatic extraction of important information An important and upcoming field is contract abstraction and migration. It automates the entire process of extracting information from your contracts. With the power of Natural Language Processing (NLP) based ML, intelligent AI algorithms can withdraw the data with remarkable speed and accuracy. It can also create an index of all keywords, critical fields, obligations, and compliances. This implies that you can automatically derive information like party names, addresses, vendor information, signature dates, renewal dates, so on and so forth. Auto-tagging can also play a critical part to bring together the right data and the right people on a single platform.

Deriving actionable insights

When a system is in place, it is obvious that there will be thousands of legal documents that will be uploaded on it. Now imagine, that you would have to go out and tag each of the clauses or important points manually for the process ahead. But with AI & ML, it has now become possible to let the system learn these tags and automate the entire process. With a trained model, you can now upload a document in the software, and it will automatically inculcate the tagging that it learned.

Key takeaways

A comprehensive CLM offers tremendous potential to help your business migrate to more robust operations. The impact of advanced AI & ML on CLMs is surely a step ahead, it unearths and unlocks the hidden potential that contracts can offer to the business. RazorSign’s CLM has been proven instrumental in being able to fit our client’s needs like a glove - the reason being, that we are able to offer unlimited. Read more about why our CLM will be your best choice.